Benefits vis-à-vis Complexities
The Business in India can be done under a legally recognized business entity. The legally recognized business entity in India ranges from sole proprietorship representing single owner to a small association of persons in case of Partnership firm and even comprising of Corporate Entity viz Private and Public limited entity which may have the shareholders (“Owners”) number running in millions.
The most common form of business entities in India are
1. Sole Proprietorship:-
Sole Proprietorship is generally the first form of doing business in India. Although the law does not recognize sole proprietorship as a separate business entity. The sole proprietorship is rather a business style through which an entrepreneurs’ represent a business name or brand to the outsiders. However, such name or brand is actually a mere front-ending tool as all the transactions are carried out in the name of proprietor such as filing of Balance Sheet, Income Tax assessment etc. etc. It is easy to form and dissolve. It is generally easier to manage the compliance work in a case of sole proprietorship as generally outsiders interest is limited in such a scenario. Generally, the people opt for sole proprietorship which tends to do business based on their owned funds as it is generally difficult to raise capital in the case of Sole Proprietorship especially equity capital.
2. Partnership
Partnership under Indian Partnership Act, 1932 is a scenario where two or more persons come together to do a business and share profit in a specified ratio. The contract of a partnership may be express or implied. Further, the registration of partnership with the registrar is not mandatory. However, to avoid the future problem, it is advisable to get the deed of a partnership registered with the Registrar of Firms.
The Law does not recognize the Partnership firm as a distinct entity as it is a mere association of persons. However, the Partnership Firm is taxable as a distinct entity under the Income Tax Act, 1961. Further, the liability of partners for the deeds of a partnership is unlimited and is joint and several with other partners.
3. Limited Liability Partnership
The Limited Liability Partnership removes certain drawbacks of simple partnership. As in case of Limited Liability partnership, all partners have a limited liability. The Law recognizes limited liability partnership as a separate legal entity. The LLP can freely make the payment of profit share of partners in a decided ratio. In LLP, dividend tax is not applicable unlike other corporate entities.
4. One Person Company
The Companies Act 2013 had introduced the concept of One Person Company. The concept of OPC inherits certain characteristics of Sole Proprietorship and corporate entity. The law gives a corporate entity status to a One Person company. The same also bring protection to the owner about their limited liability. This is entirely different from Sole Proprietorship. In-spite of corporate entity status to OPC, it is very simple to transact the business of OPC.
5. Private Limited Company
Private Limited company is an ideal form of corporate entity style of doing a business in India. It comprises of generally capital funds coming from family, friends, and partners who come together to do the business collectively. The Private limited company elects two or more directors to manage the day to day operations of the company. The Promoters/directors under the Private Limited company has a limited liability. Such company is however subject to many compliance procedures laid down under Companies Act, 2013.
6. Public Limited Company
Public Limited company is the last form of business entity. The objective of Public limited company is to give a large and broad-based participation to a very large section of the person in the ownership and management of the company. The Public limited company has to follow the prescribed procedure for management of the affairs of the company. The compliance work in the case of a public limited company is much higher as compared to all other business form. All provisions of various corporate laws are applicable to nearly all types of the public limited company irrespective of its size and activities.
How to apply for (and benefits of ) trademarks, copyright or copywriting?
Procedure and Methodology
In today’s time doing a business in India has become very competitive. The success of any business is more dependent on delivering some uniqueness than earlier. This uniqueness may be in the form of some business idea, technology, process, write-up etc. This uniqueness in the business helps in achieving the necessary up-scaling in the business. The business grows and simultaneously the brand value of the business also goes up. However, it is important to equally understand that many start-up businesses pick up any proven idea and tend to replicate the same under similar or identical business situations. Sometimes with the high level of funding support and technology in place, they are in a position to penetrate their business faster than the original business. To avoid this, registration of a trademark, patent, copyright (as applicable) offers you some protection regarding possible infringement of your technology, product or brand value.
Generally, you can get your rights secured in either Trade Mark, Copy Right or Patent or in combination or in all. This depends upon the nature of Proposed Uniqueness which is registrable.
The Rights protected by each of them are as under
- Trade Mark – As the name suggests, it is in relation to your Trade Marks (which shows the identity of your business) like your company’s logo, name style, or any other thing by which your business identity is established. The registration of the Trade Mark puts a bar over the usage of the particular or identical “Trade Mark” usage by your rival business.
- Patent – Patently is in relation to a particular method of doing a business. Generally, it is in relation to series of a process which constitutes business method. You can generally get the particular technology, a process registered under the Patent.
- Copy Right – Copyright is used generally in relation to any literary, dramatic, musical and artistic work. Like for instance, any write up, cinematography or sound recordings. The registration of copyright gives you the protection over the un-authorized usages of your copyright by your rivals and thereby help in promoting creativity.
The Registration of Trademark, copyright or Patent is generally similar.
Step 1 – First of all, a search is made with the relevant registrar office and checking out the database to see whether the same or identical registration is granted to other business entity.
Step 2 – Identify the relevant class under which you want your work registered.
Step 3 – Complete your application. The application may be submitted by you or by your appointed attorney through letter of authorization
Step 4 – Pay the requisite statutory fee for registration. Different fees are applicable for Trade Mark, Copyright or registration of patent.
Procedural Methodology
One Person company is another form of doing the business in India. OPC combines certain attributes of Sole Proprietorship Business as well as a Corporate entity. In a relatively smaller organizational set up wherein any single person can form a One Person Company under The Companies Act, 2013. The same can discharge all functions with the help of single director. One Person Company saves the procedural hassles from convening Board Meeting or General Body meeting for transacting the important business of the company. Such company have to compulsorily nominate a person as the Nominee Director in its Memorandum and Articles of association of the company who will be vested with the rights of single director and owners
How to form a One Person Company – Documents Required
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Ideal to Whom
Benefits
- OPC is easy to Start as its incorporation formalities are lesser than in case of other body corporates
- It is easy to transact the business as in case of OPC, all administrative powers are vested with single individual
Dis-Advantages
| · OPC can not voluntarily convert itself into Private Limited / Public Limited company within 2 years of its incorporation.
· OPC will mandatorily convert into Private Limited Company or Public Limited Company in case of its breach of threshold limits like for instance its Paid up share capital exceeding Rs. 50 lacs or Average Annual Turnover exceeds Rs. 2 Cr. · OPC can not invite any external private investment in it
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Ideal for Whom
| · For the family-run business to be operated by a Single Person. Therefore, they can take benefit of a separate legal entity as well as limited personal liability. |
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